Legal Developments Needed for a Token-Based CBDC

Account-based Central Bank Digital Currency (CBDC) is not a radical departure from existing forms of money. While there is a need to amend and develop existing public law in the form of central bank and monetary law for CBDC, tokenbased CBDC represent a new form of money. The IMF has already written about account-based CBDC. It has now issued a paper on the private law framework needed for a retail token-based CBDC ¹.

How those laws are framed will determine how token- based CBDC can be transferred, held in custody, ‘deposited’ with commercial banks, and pledged.

They will also need to establish how ownership and other rights in token-based CBDC can be transferred between economic agents.

A comprehensive legislative framework will be needed to provide a robust and predictable legal foundation for this new digital currency. A key decision will be whether to anchor token-based CBDC in a broader framework for digital money or assets.